SUB-ADVISORY AGREEMENT
THIS AGREEMENT, entered into as of the date the registration statement of the
CAROLINASFUND of the The Nottingham Investment Trust II becomes effective with
the Securities and Exchange Commission, by and between THE NOTTINGHAM INVESTMENT
TRUST II (the "Trust"), a Massachusetts Business Trust, XXXXXXXX CAPITAL
ADVISORS, LLC, a North Carolina limited liability company (the "Advisor"),
registered as an investment advisor under the Investment Advisors Act of 1940,
as amended (the "Advisors Act"), and CAPITAL INVESTMENT COUNSEL, INC., a North
Carolina corporation (the `Sub-Advisor"), registered as an investment advisor
under the Advisors Act.
WHEREAS, the Trust is registered as a diversified, open-end management
investment company of the series type under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, the Trust has retained the Advisor to furnish investment advisory
services to the CAROLINASFUND series of the Trust;
WHEREAS, the Trust and Advisor desire to retain the Sub-Advisor to furnish
investment advisory and administrative services to the CAROLINASFUND series of
the Trust, and the Sub-Advisor is willing to so furnish such services;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust and the Advisor hereby appoint the Sub-Advisor
to act as Sub-Advisor to the CAROLINASFUND (the "Fund") series of the
Trust for the period and on the terms set forth in this Agreement. The
Sub-Advisor accepts such appointment and agrees to furnish the services
herein set forth, for the compensation herein provided.
2. Delivery of Documents. The Trust has furnished the Sub-Advisor with
copies properly certified or authenticated of each of the following:
(a) The Trust's Declaration of Trust, as filed with the State of
Massachusetts (such Declaration, as presently in effect and as
it shall from time to time be amended, is herein called the
"Declaration");
(b) The Trust's bylaws (such bylaws, as presently in effect and as
they shall from time to time be amended, are herein called the
"bylaws");
(c) Resolutions of the Trust's Board of Trustees and the resolution
approved by a majority of the outstanding shares of the Fund
authorizing the appointment of the Sub-Advisor and approving
this Agreement;
(d) The Trust's Registration Statement on Form N-1A under the 1940
Act and under the Securities Act of 1933 as amended, (the "1933
Act"), relating to shares of beneficial interest of the Fund
(herein called the "Shares") as filed with the Securities and
Exchange Commission ("SEC") and all amendments thereto;
(e) The Fund's Prospectus (such Prospectus, as presently in effect
and all amendments and supplements thereto are herein called the
"Prospectus").
The Trust will furnish the Sub-Advisor from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements to the foregoing at the same time as such documents are
required to be filed with the SEC.
3. Management. Subject to the supervision of the Trust's Board of Trustees
and the Advisor, the Sub-Advisor will provide a continuous investment
program for the Fund, including investment research and management with
respect to all securities, investments, cash and cash equivalents in
the Fund. Subject to any limitations established from time to time by
the Advisor, the Sub-Advisor will determine from time to time what
securities and other investments will be purchased, retained or sold by
the Fund. The Sub-Advisor will provide the services under this
Agreement in accordance with the Fund's investment objectives, policies
and restrictions as stated in its Prospectus. The Sub-Advisor further
agrees that it:
(a) Will conform its activities to all applicable Rules and
Regulations of the Securities and Exchange Commission and will,
in addition, conduct its activities under this Agreement in
accordance with regulations of any other Federal and State
agencies which may now or in the future have jurisdiction over
its activities under this Agreement;
(b) Will place orders pursuant to its investment determinations for
the Fund either directly with the issuer or with any broker or
dealer. In placing orders with brokers or dealers, the
Sub-Advisor will attempt to obtain the best net price and the
most favorable execution of its orders. Consistent with this
obligation, when the Sub-Advisor believes two or more brokers or
dealers are comparable in price and execution, the Sub-Advisor
may prefer: (i) brokers and dealers who provide the Fund with
research advice and other services, or who recommend or sell
Trust shares, and (ii) brokers who are affiliated with the Fund
or its Advisors; provided, however, that in no instance will
portfolio securities be purchased from or sold to the
Sub-Advisor or any affiliated person of the Sub-Advisor in
principal transactions; and
(c) Will provide, at its own cost, all office space, facilities and
equipment necessary for the conduct of its advisory activities
on behalf of the Fund.
4. Services Not Exclusive. The advisory services furnished by the
Sub-Advisor hereunder are not to be deemed exclusive, and the
Sub-Advisor shall be free to furnish similar services to others so long
as its services under this Agreement are not impaired thereby;
provided, however, that without the written consent of the Trustees,
the Sub-Advisor will not serve as investment advisor to any other
investment company having a similar investment objective to that of the
Fund. The Trust hereby approves the services of the Sub-Advisor as
investment advisor to the Capital Value Fund series of the Trust.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Advisor hereby agrees that all records
which it maintains for the benefit of the Fund are the property of the
Fund and further agrees to surrender promptly to the Fund any of such
records upon the Fund's request. The Sub-Advisor further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by it pursuant to Rule 31a-1
under the 1940 Act that are not maintained by others on behalf of the
Fund.
6. Expenses. During the term of this Agreement, the Sub-Advisor will pay
all expenses incurred by it in connection with its investment advisory
services pertaining to the Fund.
Notwithstanding the foregoing, the Fund shall pay the expenses and
costs of the following:
(a) Taxes, interest charges and extraordinary expenses;
(b) Brokerage fees and commissions with regard to portfolio
transactions of the Fund;
(c) Fees and expenses of the custodian of the Fund's portfolio
securities;
(d) Fees and expenses of the Fund's administrator, transfer and
dividend disbursing agent and the Fund's fund accounting agent
or, if the Fund performs any such services without an agent, the
costs of the same;
(e) Auditing and legal expenses;
(f) Cost of maintenance of the Fund's existence as a legal entity;
(g) Compensation of trustees who are not interested persons of the
Advisor or Sub-Advisor as applicable law defines that term;
(h) Costs of Trust meetings;
(i) Federal and State registration or qualification fees and
expenses;
(j) Costs of setting in type, printing and mailing Prospectuses,
reports and notices to existing shareholders;
(k) The investment advisory fee payable to the Advisor; and
(l) Plan of Distribution expenses, but only in accordance with the
Plan of Distribution as approved by the shareholders of the
Fund.
7. Compensation. For the services provided and the expenses assumed by the
Sub-Advisor hereunder, the Advisor will pay the Sub-Advisor and the
Sub-Advisor will accept as full compensation an investment advisory fee
payable by the Advisor, based upon the daily average net assets of the
Fund, computed at the end of each month and payable within five (5)
business days thereafter, based upon the schedule attached hereto as
Exhibit A.
8.(a) Limitation of Liability. The Sub-Advisor shall not be liable for any
error of judgment, mistake of law or for any other loss whatsoever
suffered by the Fund in connection with the performance of this
Agreement, except a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services or a loss resulting
from willful misfeasance, bad faith or gross negligence on the part of
the Sub-Advisor in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
8.(b) Indemnification of Sub-Advisor. Subject to the limitations set forth in
this Subsection 8(b), the Fund shall indemnify, defend and hold
harmless (from the assets of the Trust or Trusts to which the conduct
in question relates) the Sub-Advisor against all loss, damage and
liability, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses,
including reasonable accountants' and counsel fees, incurred by the
Sub-Advisor in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, related to or resulting
from this Agreement or the performance of services hereunder, except
with respect to any matter as to which it has been determined that the
loss, damage or liability is a direct result of (i) a breach of
fiduciary duty with respect to the receipt of compensation for
services; or (ii) willful misfeasance, bad faith or gross negligence on
the part of the Sub-Advisor in the performance of its duties or from
reckless disregard by it of its duties under this Agreement (either and
both of the conduct described in clauses (i) and (ii) above being
referred to hereinafter as "Disabling Conduct"). A determination that
the Sub-Advisor is entitled to indemnification may be made by (i) a
final decision on the merits by a court or other body before whom the
proceeding was brought that the Sub-Advisor was not liable by reason of
Disabling Conduct, (ii) dismissal of a court action or an
administrative proceeding against the Sub-Advisor for insufficiency of
evidence of Disabling Conduct, or (iii) a reasonable determination,
based upon a review of the facts, that the Sub-Advisor was not liable
by reason of Disabling Conduct by, (a) vote of a majority of a quorum
of Trustees who are neither "interested persons" of the Fund as the
quoted phrase is defined in Section 2(a)(19) of the 1940 Act nor
parties to the action, suit or other proceeding on the same or similar
grounds that is then or has been pending or threatened (such quorum of
such Trustees being referred to hereinafter as the "Independent
Trustees"), or (b) an independent legal counsel in a written opinion.
Expenses, including accountants' and counsel fees so incurred by the
Sub-Advisor (but excluding amounts paid in satisfaction of judgments,
in compromise or as fines or penalties), may be paid from time to time
by the Fund or Trust to which the conduct in question related in
advance of the final disposition of any such action, suit or
proceeding; provided, that the Sub-Advisor shall have undertaken to
repay the amounts so paid if it is ultimately determined that
indemnification of such expenses is not authorized under this
Subsection 8(b) and if (i) the Sub-Advisor shall have provided security
for such undertaking, (ii) the Fund shall be insured against losses
arising by reason of any lawful advances, or (iii) a majority of the
Independent Trustees, or an independent legal counsel in a written
opinion, shall have determined, based on a review of readily available
facts (as opposed to a full trial-type inquiry), that there is reason
to believe that the Sub-Advisor ultimately will be entitled to
indemnification hereunder.
As to any matter disposed of by a compromise payment by the Sub-Advisor
referred to in this Subsection 8(b), pursuant to a consent decree or
otherwise, no such indemnification either for said payment or for any
other expenses shall be provided unless such indemnification shall be
approved (i) by a majority of the Independent Trustees or (ii) by an
independent legal counsel in a written opinion. Approval by the
Independent Trustees pursuant to clause (i) shall not prevent the
recovery from the Sub-Advisor of any amount paid to the Sub-Advisor in
accordance with either of such clauses as indemnification of the
Sub-Advisor is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable belief
that the Sub-Advisor's action was in or not opposed to the best
interest of the Fund or to have been liable to the Fund or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in its conduct
under the Agreement.
The right of indemnification provided by this Subsection 8(b) shall not
be exclusive of or affect any of the rights to which the Sub-Advisor
may be entitled. Nothing contained in this Subsection 8(b) shall affect
any rights to indemnification to which Trustees, officers or other
personnel of the Fund, and other persons may be entitled by contract or
otherwise under law, nor the power of the Fund to purchase and maintain
liability insurance on behalf of any such person.
The Board of Trustees of the Trust shall take all such action as may be
necessary and appropriate to authorize the Fund hereunder to pay the
indemnification required by this Subsection 8(b) including, without
limitation, to the extent needed, to determine whether the Sub-Advisor
is entitled to indemnification hereunder and the reasonable amount of
any indemnity due it hereunder, or employ independent legal counsel for
that purpose.
8.(c) The provisions contained in Section 8 shall survive the expiration or
other termination of this Agreement, shall be deemed to include and
protect the Sub-Advisor and its directors, officers, employees and
agents and shall inure to the benefit of its/their respective
successors, assigns and personal representatives.
9. Duration and Termination. This Agreement shall become effective upon
the date the registration statement of the Trust containing the Fund's
Prospectus is declared effective by the Securities and Exchange
Commission and, unless sooner terminated as provided herein, shall
continue in effect for two years. Thereafter, this Agreement shall be
renewable for successive periods of one year each, provided such
continuance is specifically approved annually:
(a) By the vote of a majority of those members of the Board of
Trustees who are not parties to this Agreement or interested
persons of any such party (as that term is defined in the 1940
Act), cast in person at a meeting called for the purpose of
voting on such approval; and
(b) By vote of either the Board of Trustees or a majority (as that
term is defined in the 0000 Xxx) of the outstanding voting
securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated by the
Fund or by the Sub-Advisor at any time on sixty (60) days' written
notice, without the payment of any penalty, provided that termination
by the Fund must be authorized either by vote of the Board of Trustees
or by vote of a majority of the outstanding voting securities of the
Fund. This Agreement will automatically terminate in the event of its
assignment (as that term is defined in the 1940 Act).
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by a written
instrument signed by the party against which enforcement of the change,
waiver, discharge or termination is sought. No material amendment of
this Agreement shall be effective until approved by vote of the holders
of a majority of the Fund's outstanding voting securities (as defined
in the 1940 Act).
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby. This Agreement shall be
binding and shall inure to the benefit of the parties hereto and their
respective successors.
12. Applicable Law. This Agreement shall be construed in accordance with,
and governed by, the laws of the State of North Carolina.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
ATTEST: THE NOTTINGHAM INVESTMENT TRUST II
By: By:
________________________ ____________________________
Title: Title:
_____________________ _________________________
ATTEST: XXXXXXXX CAPITAL ADVISORS, LLC
By: By:
________________________ ____________________________
Title: Title:
_____________________ _________________________
ATTEST: CAPITAL INVESTMENT COUNSEL, INC.
By: By:
________________________ ____________________________
Title: Title:
_____________________ _________________________
EXHIBIT A
SUB-ADVISOR'S COMPENSATION SCHEDULE
For the services delineated in the SUB-ADVISORY AGREEMENT, the Sub-Advisor shall
be compensated monthly by the Advisor, as of the last day of each month, within
five business days of the month end, a fee based upon net assets according to
the following schedule.
Annual
Net Assets Fee
-------------- ------
On the first $250 million 0.25%
On all assets over $250 million 0.25%
